Plans by IAWS and Greencore to enter the British flour markets have been frustrated after the British group Tomkins sold four of its Spillers flour mills to the American group Archer Daniels Midland.
Tomkins bought the six Spillers mills from Kerry Group last year but was ordered to sell four of them by the Office of Fair Trade in the UK.
IAWS had lodged a formal bid for the four mills at Avonmouth, Liverpool, Newcastle and Tilbury, but IAWS finance director, Mr David Martin, said that the group was not disappointed at the outcome.
He said that IAWS had submitted a relatively low bid for the four mills which reflected Spillers' lost business and market share in the period since the OFT ordered their disposal.
"We did spend a lot of time and money looking at Spillers and doing due diligence, but in the end we decided that Spillers had become headless and rudderless. There would have been a huge work of reorganisation involved and we would have been willing to do that, but we won't pay for something that won't give us value."
Tomkins did not disclose the price paid by ADM for the four mills, but analysts have previous speculated that they would be worth between £50 million and £60 million sterling. The four mills had about 15 per cent of the British flour market, but Mr Martin indicated that over the past year they have lost business and market share.
IAWS has a history of not overpaying for businesses, and despite the attractions of the British flour market and the move by its Cuisine de France subsidiary into the UK, analysts believe that the group's bid for the Spillers mills was very much on the low side.
They added that the Spillers bid was not a wasted effort for IAWS, as the due diligence on the flour mills would have given the Irish group valuable intelligence on the British flour market, intelligence that will be of immense value when IAWS starts to source flour for its planned £15 million Cuisine de France bakery in Nottingham.
Greencore had indicated that it was interested in bidding for one of the Spillers mills, but industry sources said that this was never a runner, given Tomkins desire to sell the four mills as a unit.
Tomkins is to take a £40 million sterling loss on the sale of the four mills - it paid Kerry £92 million sterling for the six mills a year ago.
